3 Steps For Completing An ESG Gap Assessment

// Business has changed. The bar is getting higher. Regulators, investors, and clients demand that corporations provide transparent environmental, social, and governance (ESG) disclosures. ESG missteps can result in loss of business, loss of investment dollars, greenwashing allegations, and brand damage. And the stakes are getting higher as new regulations come into effect.

In-house legal teams are increasingly finding themselves in the crosshairs of ESG challenges, opportunities, and risks. Often they are told something like “Put an ESG plan in place.”

googletag.cmd.push( function() { // Display ad. googletag.display( "div-id-for-top-300x250" ); });

If you are on the receiving end of this vague direction, it will be hard to get started. What does that even mean?

Sponsored Early Adopters Of Legal AI Gaining Competitive Edge In Marketplace How to best leverage generative AI as an early adopter with ethical use. From LexisNexis  

I take a practical approach to ESG. I like to break things down into clear and actionable steps. It’s a big part of why I was able to roll out an ESG program at my last company from scratch.

Here is the secret to getting started. You must assess your ESG gap. This assessment will be the cornerstone of your business case and your action plan.

googletag.cmd.push( function() { // Display ad. googletag.display( "div-id-for-middle-300x250" ); }); googletag.cmd.push( function() { // Display ad. googletag.display( "div-id-for-storycontent-440x100" ); }); googletag.cmd.push( function() { // Display ad. googletag.display( "div-id-for-in-story-youtube-1x1" ); });

You can complete an ESG gap assessment in three steps.

Step 1: Create A Master List Of ESG Actions 

Sponsored Sponsored Is The Future Of Law Distributed? Lessons From The Tech Adoption Curve The rise of remote work has dramatically reshaped the relationship between Lawyers and Law Firms, see how Scale LLP has taken the steps to get… From The Team at Scale LLP   Sponsored Navigating Financial Success by Avoiding Common Pitfalls and Maximizing Firm Performance In this CLE-eligible webinar, we’ll explore the most common accounting pitfalls and how to avoid them for your firm. From Pilot and Above The Law   Sponsored How Generative AI Will Improve Legal Service Delivery Learn how emerging tools will likely change and enhance the work of lawyers for years to come in this new report. From Thomson Reuters   Sponsored Legal AI: 3 Steps Law Firms Should Take Now If 2023 introduced legal professionals to generative AI, then 2024 will be when law firms start adapting to utilize it. Things are moving fast, so… From LexisNexis  

Your company is probably being asked to do a lot of things on ESG. You need to identify and organize those asks. Create a master list starting with these sources:

• Requests for ESG data that you have received from clients
• Requests for ESG data that you have received from investors
• Commitments you have made in contracts
• Items that you need for third-party ESG assessments (like Ecovadis)
• Requirements from any new or upcoming regulations

Check your list against the items in this article on 8 Elements Every ESG Program Must Have.

googletag.cmd.push( function() { // Display ad. googletag.display( "div-id-for-bottom-300x250" ); });

As you create this list, keep track of where the requests came from and note overlaps. Use this information to prioritize later.

Step 2: Inventory Your Current Practices Using The Master List

Sponsored Sponsored Legal AI: 3 Steps Law Firms Should Take Now If 2023 introduced legal professionals to generative AI, then 2024 will be when law firms start adapting to utilize it. Things are moving fast, so… From LexisNexis   Sponsored Early Adopters Of Legal AI Gaining Competitive Edge In Marketplace How to best leverage generative AI as an early adopter with ethical use. From LexisNexis  

Once you have your master list, reach out to the relevant departments across your organization to collect information related to each item. For example, you may need to:

• Ask your human resources department for information related to labor and employment and health and safety
• Check legal and compliance records to determine if your governance policies are complete
• Look at how your operations team manages suppliers
• Review (and verify) what is on your website

You will probably discover that you have more pieces of an ESG program than you thought. Often ESG efforts are siloed and not well known across the company. You can use this as an opportunity to assemble the relevant information to respond to future questionnaires.

Step 3: Prioritize Potential ESG Actions

At this stage, you will know your gaps. You will probably have a lot of them. Great. So what do you do with that information?

Organize ESG actions into four categories:

• Completed (Well done!!!)
• Quick wins
• Strategic considerations
• Items for the future

Quick wins are easy items you can complete to make your stakeholders happy and items that you must complete to be a responsible business. These could include things like filling gaps in your ethics and labor policies and documenting existing responsibilities for ESG.

Strategic considerations are items that depend on the strategy developed by your executive team. For example, you will likely need an executive decision on your approach to climate and DEI.

Items for the future are things you are being asked for that aren’t relevant to your business today.  If your current business does not touch on an ESG item, put it on a watch list and focus on what you can impact now.

Completing an ESG gap assessment will enable you to shift from a high-level goal (put an ESG plan in place) to a specific list of actions that you need to take and decisions that need to be made. It will also help you say “No” to external requests that don’t fit in with the broader picture.

Curious what to do next? Check out my 12-Month ESG Roadmap For In-House Counsel. The roadmap provides a guide you can use to go from ESG assessment to reporting in a year.

Christine Uri is a Top 100 Voice in Sustainability. She advises general counsel on the development and implementation of environmental, social, and governance (ESG) programs. As a former Chief Legal Officer and Chief Sustainability Officer for a global sustainability company, Christine knows what it takes to move ESG to the top of the corporate agenda. Christine believes that improving corporate performance on ESG measures is critical to building a more sustainable world. She is passionate about inspiring and empowering in-house legal teams to provide ESG leadership. You can follow Christine on LinkedIn.

 

Topics

Biglaw, Christine Uri, Environmental Social and Governance (ESG), In-House Counsel